‘No blanket exemption from CCI oversight’

Earlier this month the Reserve Bank of India (RBI) had written to the finance ministry saying that banking sector merger should not be under the purview of the CCI. Last year as well,the finance ministry had opposed a Cabinet note proposed by the Ministry of Corporate Affairs (MCA) on Sections 5 and 6,arguing that the Commission may not be best equipped to handle bank M&As.

“The GoM is of the opinion that if any sector wants an exemption,it should make a case and come to the Commission seeking exemption under Section 54 of the Competition Act,” a government official told The Indian Express. Under Section 54 of the Competition Act,2002,the Central government has powers to exempt any enterprise or practice from the application of the Act.

As such,the competition watchdog has been maintaining all along that “in cases where viability of a bank is in danger,such cases of failing banks will be handled on top priority to prevent any run down ripple effect on economy.”

According to Section 2A of the Banking Laws (Amendment) Bill,2011,“notwithstanding anything contrary contained in Section 2,nothing contained in Competition Act,2002,shall apply to any banking company,the State Bank of India,any subsidiary bank,any corresponding new bank or any regional rural bank or cooperative bank or multi-state cooperative bank in respect of the matters relating to amalgamation,merger,reconstruction,transfer,reconstitution or acquisition under respective Acts.”

The GoM was attended by telecom minister Kapil Sibal,law minister Salman Khurshid and corporate affairs minister Veerappa Moily. Further,the GoM has also recommended mandatory consultations between the CCI and sectoral regulators in cases of M&As.

“This will help in sorting out the regulatory overlaps and help in reduction of turf war,” the official said.

More teeth to CCI

Group of Ministers (GoM),chaired by finance minister P Chidambaram,set up for suggesting amendments in the Competition Act,rules out blanket exemptions to any sector

Earlier this month,the Reserve Bank of India had written to the finance ministry saying that banking sector merger should not be under the purview of the CCI

The finance ministry had also opposed a Cabinet Note proposed by the corporate affairs ministry on bringing banking mergers under the Competition Commission of India (CCI) saying that the body was not equipped to handle the issue

The GOM is of the view that any sector seeking exemption under Section 54 of the Competition Act should make a case and seek exemption from the CCI